Same Day Delivery Pushes E-Commerce Beyond the Limit

12 Oct 2018

The availability and continued growth of internet technologies (IT) have created great opportunities for users all over the globe, especially in online businesses known as electronic commerce or e-commerce.

As the real engine of the new economy, e-commerce is a remarkable source of competitive advantage for businesses and a new space for consumers. We are witnessing technological advances economic transactions have become much easier and faster and this is mainly because of the development of e-commerce. In the coming years, growth and profitability will depend on the ability to introduce these new emerging technologies and adopt new methods of business transactions.

Indonesia, among other emerging Asian economies, presents many opportunities for e-commerce. Current projections put the archipelago’s online market at US$130 billion by 2020. With Indonesia’s uniqueness, the e-commerce industry should innovate to dominate the market by improving logistics, technology, and other important facets.

The Prospect

Indonesia is home to 261.12 million people with a total GDP of 932.26 billion USD and GDP per capita of 4,195 USD, which is expected to reach 5,790 USD by 2022. Internet penetration in Indonesia is currently 42.1% and should reach 49.9% by 2022. Smartphone penetration is a little less (26.3%), but is projected to grow to 32.1% in the next four years. On average, Indonesian desktop users spend 4 hours 48 minutes per day on the internet, whereas mobile users spend 3 hours 55 minutes.

According to Statista, there are currently 31.65 million e-commerce users in Indonesia, with an additional 22.24 million users expected to be shopping online by 2022. Four years from now, these 43.89 million e-commerce users will spend an average of 375.32 USD online. About 55% of online shoppers in Indonesia frequently buy via mobile, compared to 46% who buy via desktop (46%) and tablet (40%) shoppers.

Only 31.65 million e-commerce users from to 261.12 million people in Indonesia means there is still big opportunity to grow bigger and bigger. On the back of this growth, there has seen huge changes in the logistics industry, as carriers adapt to a new delivery economy.

Delivery time is one of the most common issues Indonesians face when shopping online. People would say, “I don’t want to buy online because it takes a really long time to get an item. I’d rather buy stuff from a physical store, so I can take it right away.”

Indonesia’s courier and delivery service sector has been consistently registering double-digit growth for the last several years, in line with the rapid development of the country’s e-commerce industry. E-commerce has become a key driver of growth for the sector and now contributes up to 25% to total revenues for the industry.

Online e-commerce in 2018 will be marked by faster delivery times and stronger identity verification. The need to speed up shipping will be something retailers need to continue to work on in 2018. But retailers will also be future focused this year, embracing new ways to verify identification in an era of increasing security breaches and widespread identity theft.

Indonesia’s courier and delivery service sector is expected to keep growing in order to catch up with the rapid development of the country’s e-commerce industry. According to the Indonesia E-commerce Association (Idea) and the Ministry of Communication and Informatics, domestic e-commerce transactions reached 25 billion USD or 295 trillion IDR in 2016 and this figure is expected to soar to 130 billion USD by 2020. Many predict that e-commerce will occupy 20% market share in the retail sector over the next four years.

Gojek and Grab, two online transportation companies in Indonesia have responded to this situation. Both companies have established partnership with well-known e-commerces in Indonesia such as Tokopedia and Shopee thus consumers may receive their purchased stuff on the same day.

Furthermore, some well-known players in delivery industry like JNE and TIKI are also launched its same day services to maintain the needs of their existing customer.Pos Indonesia seems would not even miss this opportunity. As a positive response, they introduce PosExpress services to join the market.

Within the next few years, the number of e-commerce players in Indonesia is expected to increase to 5 million and these will require courier companies to deliver their goods to their customers. This will offer huge opportunities to Indonesian domestic courier and delivery service companies which currently only hold a third of the total market share.